Hong Kong: HANG SENG INDEX (.HSI) Falls To Five-Week Low Amid Lowered Trading Sentiments

Hong Kong: HANG SENG INDEX (.HSI) Falls To Five-Week Low Amid Lowered Trading Sentiments

Hong Kong: HANG SENG INDEX (.HSI) Falls To Five-Week Low Amid Lowered Trading Sentiments

Extradition protests in Hong Kong escalated over the weekend, sending the city’s Hang Seng Index to its lowest point in over five weeks. Protesters continue to rally across the streets, further worsening trading sentiments within the city’s equities markets.

According to local media reports, several participants from both sides have been injured, but fortunately no casualties have been reported. Hong Kong’s Chief Executive Carrie Lam has publicly condemned the rallies. Lam stated in an interview that the rallies are unacceptable and the behavior from people living in a civilized society is unbecoming. Hong Kong still backs the extradition proposal and has promised that it will include human rights safeguards and other similar measures to appease the public’s concerns.

Investors in the country were quick to cash out their profits leading up to the protests. This resulted in a massive drop in the Hang Seng Index, which fell by 1.7 percent to 27,308.46 in just one day. This was the biggest drop since the index plunged by 2.4 percent on May 9 following the escalation of the trade war between China and the United States.

The drop in the equities market in Hong Kong also reverberated in Mainland China’s two major exchanges. The Shanghai Composite Index dropped by 0.6 percent, while Shenzhen’s bourse fell by 0.6 percent.

The rally in Hong Kong, which started on Sunday, reportedly attracted more than 1 million protesters. However, police officials revealed that they estimated that there may have been around 240,000 active protesters during the rally. The rally was organized to oppose the city’s proposed extradition bill. It was the biggest demonstration on the streets of Hong Kong since the city was handed over to China by the United Kingdom in 1997.

The various demonstrations are really not helping in improving investor confidence in the city’s equities market. The events that have transpired are reminiscent of the massive Occupy Movement protests in 2014, which had sent the Hang Seng Index down by 4.2 percent. These types of rallies also do have a negative effect on the island’s economy as hotels, restaurants, and small businesses lose revenue due to blocked roads and lesser foot traffic.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 27,950.24.

The projected upper bound is: 28,090.39.

The projected lower bound is: 26,441.69.

The projected closing price is: 27,266.04.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 63.9118. This is not an overbought or oversold reading. The last signal was a sell 1 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 41.74. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 4 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -16. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 4 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -13.750 at 27,294.711. Volume was 4% below average (neutral) and Bollinger Bands were 21% narrower than normal.

Open High Low Close Volume___
27,217.72127,294.71126,825.35027,294.7111,903,405,312

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 27,150.32 28,676.97 27,437.80
Volatility: 19 18 22
Volume: 1,882,857,088 2,040,915,456 1,871,979,136

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

HANG SENG INDEX is currently 0.5% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of .HSI (mildly bearish). Our trend forecasting oscillators are currently bearish on .HSI and have had this outlook for the last 25 periods.

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